HSC BUSINESS

Topic two: MARKETING

General course overview :

- What do customers want to buy now and in the future

- involves a wide range of activities, directed at a wide range of goods, services and ideas
- stresses the importance of satisfying changes, is not limited to the activities of businesses
- multifaceted and doesn't just involved selling or advertising

role of marketing
● strategic role of marketing goods and services

The main role of marketing is to maximise profit and it is considered a revenue centre, because it
generates sales.
PROFIT MAXIMISATION (occurs when there is a max difference between the total revenue coming
into the business and total costs being paid out)
Profit maximisation through the revenue of marketing
Whole point is to increase sales through marketing mix
Operation - decrease expenses
Marketing - increase profit

Marketing is a revenue centre, thus its strategic role is to achieve profit maximisation, which it does
through the marketing mix.

role of marketing
● interdependence with other key business functions

They achieve this through the marketing concept, which puts the customers at the centre of the
process
Also known as relationship marketing - continual
Relationship with the consumer past the point of sale
(best business that implements this is Apple)
Eg. warranty, genius bar), cars - car service
So the people have a connection and affiliation with the brand through their identity, lifestyle and
service
Thus, all key functions are centred around marketing - as this function researches the needs of the
consumer
Businesses must integrate their marketing plans with all key functions
- Whilst operations decreases expenses, marketing increases profit
- Marketing costs money, finance must be available
- Marketing manager needs other managers who can successfully carry out operations and HR
➢ Operations/marketing → marketing determines the products/services to be produced
Marketing increases sale, whilst operations decreases cost - decides what will actually be
product
Therefore together they increase product

➢ Without finance, you can't do the research

Although marketing generates income - it is very expensive

➢ Marketing determines the products and services that will be produced through market
research
Research is a vital aspect of marketing

role of marketing
● production, selling, marketing approaches

1. Production approach - 1820s to 1920s

Business focus on the production of goods and services
Marketing wasn't a priority “if we make it, they will buy it” - no consumer choice
Production design was based more on the demands of mass production technoes than customer
needs
No variation
Eg. Ford was the only car manufacturer

2. Selling approach 1920s to 1960s

Add in extra layer of advertising
Emphasised selling due to increased competition
Era of door to door sales
Tupperware parties
Persuading customers to buy specific brands
Sale reps would sometimes use high pressure tactics

3. Marketing approach (stage 1) 1960s to 1980s

Find out what the customers want through market research and then satisfy their needs
‘Discretionary income’ - allowed for spending past necessities
Development of four principles:
- Customer orientated
- Aimed at satisfying customers
- Integrated into the business plan so as to achieve the business’ goals
- Aimed to develop long-term relationships with customers
 4. Marketing approach (stage 2) 1980s to present
Changing economic and special conditions over the last three decades - including:
CSR - people only burning products that are environmentally and socially just
- “Customer orientation”
- “Customer satisfaction”
- “Relationship marketing”

role of marketing
● types of markets – resource, industrial, intermediate, consumer, mass, niche

1. Resource – The resource markets are those which are involved in all forms of primary production
e.g. farming, fishing, mining

2. Industrial – industries and businesses that purchase products in the production of other products.
E.g. a bakery buying flour or milk which is then transformed into another product.

3. Intermediate – wholesalers and retailers who purchase finished products to resell them at a profit.
For example Woolworths buying products to resell.

4. Consumer – selling to the end consumer who will use the finished product. E.g. buying something
from Woolworths as an individual.

5. Mass – Mass markets exist where there is a large demand for a standard product.
The business does not tend to target specific groups of buyers as it is assumed everyone already
wants the product. For example the sale of petrol.

6. Niche – a narrow selected market with specific needs or demands. E.g. a country garden magazine.

influences on marketing
● factors influencing customer choice – psychological, sociocultural, economic, government
What determines what a consumer will buy - influences them
Businesses needs to know what influences customers to make them buy things

1. Psychological
Personal characteristics influencing buying behaviour and attitudes to certain products
Come down to perception, motivation and seklf image
How you want to be perceived will determine you attitude about products

a) Perception - image that a particular product has in the mind of consumers → marketing
campaigns should promote positive image of the product to targeted customer group to buy
to reflect this perception
 Not black and white
How does the customer perceive themselves - what products do they need
Eg. outgoing, outdoorsy - match with a product suited for that
b) Motive - reason for buying the good or service - may be comfort, health, safety, ambition,
pleasure or approval of others
Eg. Shoes - heels, comfort
Need to do market research in why they are actually going to buy this product
Eg. Fomo - promoted by social media
c) Attitudes and beliefs - shaped by one's environment and life experiences - including ethnic,
religious beliefs, political persuasions and attitudes to social issues
Eg. Skydiving - product needs to be promoted as being safe
Poeple need to be confident
If a product has negative attitudes (fear) the positives need to be emphaised
d) Personality and self-concept - behaviours, characteristics of the customer and how they
view themselves
How you see yourself and what your trying to portray
Influences - people see themselves similar to that
People want to model their life on what that person has - tied to perception
e) Learning: changes in an individual's behaviour caused by information and experiences →
marketing strategies that assist customers learning about the business encourages brand
loyalty
Important for the promotion that is teaching you about the product

2. Sociocultural
Where do you fit in to class and culture
Outside of yourself - external influences
a) Social class: influences type, quantity and quality of products bought (eg. higher income
earners may purchase luxury cars to symbolise status)
Education, job - you want your job to reflect in the items you own
b) Culture and subculture: values, beliefs, behaviours and traditions shared by a society
determines what people wear, what and how they eat, and whether and how they live
Some families are really into birthdays, christmas, others are not
Culture HUGELY determines what your going to buy
c) Family and household role: research shows most women still make buying decisions related
to healthcare products, food and laundry supplies
Eg. marketing of cleaning products traditionally goes towards women ect
d) Peer groups: buying behaviour may change to match friends (eg. if person has bad
experience at a shop or peer groups wears distinctive clothing, the items an individual will
purchase may be influenced)

e) Economic
Whether its going through a boom or a bust
Determines what you buy
If you dont have enough money coming in, you dont buy luxury goods
 - Influence of general economic trends (unemployment levels, interest rates, economic
growth/decline), along with socioeconomic status - which is determined by the person's level
of income, occupation and education

- Government
Govevernment policies directily or indirectly impact the business
- Depending on prevailing economic conditions, government will put in place policies to
expand or contract the level of economic activity → influence businesses activity and
customers spending habits and therefore the marketing plan
- businesses behaviour controlled by Competition and Consumer Act 2010 (Cth)
- Age restrictions placed on alcohol, tobacco

influences on marketing
● Consumer laws
– deceptive and misleading advertising
– price discrimination
– implied conditions
– warranties
Cant do deceptive or misleading advertising
Why do governments like small businesses?
Employment, tax, increased consumer choice, research, development and innovation

Law Role

ACL Australian consumer law (2011) Ensures all customers have the same rights, and
Protects consumer rights when dealing with all Australian business are subject to the same
businesses regulations

CCA 2010 competition and consumer act (2010) The government wants many businesses to
operate in a way that encourages competition
whilst giving consumer choice

Competition and Consumer Act 2010

There are two major purposes of this law:
The first major purpose is to protect consumers against undesirable practices. For example,
misleading advertising.
The second purpose is to regulate trade practices that restrict competition. This means the
government wants to ensure there are a number of businesses operating at the same time, in the
same market to encourage competition.
This Act is enforced by the Australian Competition and Consumer Commission which is the ACCC. For
example, if a particular wanted to buy all the businesses in the industry, it would come before the
ACCC, and they would have to reject it because it restricts competition.
The ACCC can take civil or criminal proceedings against a business or an individual. The court can
award penalties of $1.1 million for businesses and $220 000 for businesses (if you are in breach of
the Competition and Consumer Act, the ACCC will take you to court). In addition, a consumer can sue
the business for compensation.
The ACCC can issue on the spot fines to manufacturers without undertaking court action. For
example, misleading advertising.
ACCC also issues public warning notices. These warn consumers when a business is being
investigated for illegal activity.
The following are practices which are illegal under the Competition and Consumer Act.
Breaches in these laws will result in:

● Costs, time, and efforts spent fixing breaches

● Large fines, legal fees, imprisonment and damgate to business reputation
● Customers can sue businesses

Deceptive and misleading advertising:

- Fine print - people cant see it

- Ptodcut of Ausralia - just assembled here
- Packaging - you can make it look healthy
- A special offer - always having a sale
- Before and after - photoshop
- Bait and switch - advertise a product at a reduce price - hardly any of them, get you to buy a
more expensive product
- Dishonest advertising
Coles bread
“Freshly based in store and on the day”
Not true - baked night before and off site

Creates a false and misleading impression of a product and what it can do, so customers are misled
- Greenwashing - when a business lies about its environmentally friendly products
- Bait and switch - when a business uses advertising of a low priced product to lure in
customers where they are sold higher price products
- Dishonest advertising - ads could include misleading words or claim a product can do
something that it can

Price discrimination

The setting of different prices for products in different markets

Ikea is australia is far more expesonvie then ikea in europe
Price discrimination is when different prices are set for the same product in different markets:
- It is legal if there's higher costs involved or they are meeting competitors price
- It is illegal if it reduces competition or if there is no valid reason

Implied conditions

Implied conditions are the unwritten terms of a contract that are assumed to be of acceptable
quality (do what it says it will)
- Fit for purpose
- Well made and free of defects
 - Safe and durable
Cheap product shouldnt be expected to last long

Warranties

A business’ promise to fix any defects in their goods or services

- If goods are defective or services are not carried out with due care or skill, business must
compensate the customer
- Compensation can be monetary refund or exchange for a different product

influences on marketing
● ethical – truth, accuracy and good taste in advertising, products that may damage health,
engaging in fair competition, sugging
Not illegal, can be done - just done ethical
Marekting is materialistic - convcing poeple to buy products they dont need
Builds up consumerism and materialism leading to increased spending

- Eg. Collectable toys

- Marketing affects someones self worth and their priorities
- Stereotypical images based on gender - outcome is a physcological connection
- The use of sex to sell rpfocuts - not moral to use someone for their sexuality to sell a product
- Product placement - inclusion of advertising in entertainment - eg. james bond drives an
aston martin
- Invasion of privacy - use of cookies

Accuracy and good taste in advertising

Untruths due to concealed facts: taking a liberty with the truth. You aren’t lying. Omitting
information in the advertisement (e.g - Coke Commercial. Coke don’t put in health risks, therefore
omitting information.)

Exaggerated claim: puffery. Making it bigger than it actually is. Claims that can’t be proved, it is
around exaggerated flattery (e.g - it is superior. Not based on any facts, overuse of the word best).

Vague statement: this is ambiguous, you can take a statement in different ways. The consumer is
then meant to assume what is actually being said due to the use of vague words. These words are
known as weasel words. A weasel word is ‘help’ - how much does it help?. ‘Lite’ on packaging.
‘Natural’ instead of organic, which you have to prove.

Good Taste in Advertising

- This is highly subjective.
- This deals with what would be offensive in advertising.
- Things such as health ads, alcohol ads, gambling ads, ads focused on children.

Products that may damage health

- Health warnings must be displayed on cigarette packs, they cannot be advertised or dis[layed
 in stores
- Push to have similar health warnings for products containing alcohol and advertising junk
food during children's tv times

Engaging in Fair Competition

- Australian Competition and Consumer Commission (ACCC) is a federal government
independent authority that ensures businesses engage in fair, legally acceptable competition
& enforces competition and consumer act 2010
- Unfair competitive behaviour includes:
- price-fixing between competitors
- long-term loss leader - undercutting smaller competitors and forcing them to engage in
price war

Sugging
- Selling technique disguised as market research (survey) → unethical as it aims to deceive
- Somebody tells you that their going to do a survey but they are actually trying to tell you
things

marketing process
● situational analysis – SWOT, product life cycle

Situational analysis
Enables management to gain an understanding of the businesses current position and where it is
headed

SWOT ANALYSIS
- Strengths: What the business does better than competitors
- Weaknesses: What its competitors do better
- Opportunities: Changes in external environment that can be exploited to achieve objectives
- Threats: Changes in external environment that make it difficult to achieve objectives
- internal forces (businesses can control) = strengths and weaknesses
- external forces (out of businesses control = opportunities and threats

Positives Negatives

Internal Strengths Weaknesses

● Resources
● Management
● Culture
● Product
● Location

External: Opportunities threats

● Competitive situation
● Economic situation
● Financial
● Political
 ● Geographical
● Technological

PRODUCT LIFE CYCLE

Consists of the stages a product passes through, with different marketing strategies required at each
stage
➔ Introduction: slow sales, low profit, and requires heavy promotion to increase consumer
awareness and market share
➔ Growth: sales increase, profits rise, high levels of promotion to increase consumer awareness
and market share
➔ Maturity: high competition, sales steady, profits may begin to decline
➔ Post maturity (enters either decline or renewal)
★ Decline - sales fall, negative profits, reduce promotion efforts, narrow distribution
and eventual elimination
★ Renewal - product revitalised with increased promotion, new promotional
campaigns, brand altered

marketing process
● Market research
Process of collecting, recording and analysing data to solve a specific market problem

Determining information needs

Problem is clearly and accurately stated to determine what needs to be measured and the issues
involved

Collecting Data from Primary and Secondary Sources

Primary - collected first hand by for the marketing problem (eg. surveys, observational research)

Secondary - already exists for another purpose - can be internal (eg. research reports, financial
statement, customer feedback OR external (eg. ABS, government reports)

Analyzing and interpreting data

- Data will be tabulated then analysed to identify any trends or patterns present
- Appropriate course of action will be taken based on conclusions drawn
Analysed and interpreted to create useful info

marketing process
● Establishing marketing objectives

Marketing objectives = Measurable goals to be achieved through the business plan

Should be closely aligned with the overall business goals whilst staying consumer focused
Specific - clear, precise and relate to specific elements of the business
Measurable - developing controls to measure extent to which its been archive
Achievable - needs to have financial and HR resources
Realistic
Timed - establish a time frame for it to be achieve
Increasing market share
Allows business to become more dominant in marketplace

Expanding product range

May attract new markets, same product mix in long term will be ineffective due to changing tastes
Will increase business sales as the products its sells appeals to more customers

Maximising customer service

Encourage repeat purchases, due to high levels of customer satisfaction - customer service is
responsible to the needs and the problems of the customers

marketing process
● Identifying Market Trends

Target market = group of present and potential customers a business intends to sell its products to
Allow businesses to develop strategies that better satisfy the needs of customers

Primary market - market segment that marketers target most of their resources towards
Secondary market - a smaller less important market segment that businesses sell to

Mass marketing approach - the businesses targets a large range of customers with common needs ,
wants and demands (can use single marketing mix aimed at the entire market and has little product
variation) eg. demographic, geographical

Marketing segmentation approach - total market is subdivided into subgroups who share common
characteristics - business is able to develop a marketing plan that meets the needs of a relatively
uniform group

Niche market approach - specific, narrowly selected target market segment

marketing process
● Developing marketing strategies

These strategies are undertaken to achieve the business’ marketing objectives through the marketing
mix:

- Product - determining quality, packaging, labelling

- Price - whether to set above, below or around competitor price
- Promotion - methods business use to inform, persuade customer to buy products
- place - intermediaries and physical distribution

marketing process
● Implementation, monitoring and controlling

Implementation is the process of introducing marketing strategies into operation

A financial forecast is developed to compare expected costs and revenues for each strategy to actual
performance

Monitoring: involves observing the actual progress of the marketing plan

Controlling:involves comparing actual and planned results to see if objectives were reasonable and if
strategies were effective or should be revised

Key performance indicators (KPI’S)

● Sales analysis
● Market share analysis
● Market profitability analysis

Revising the marketing strategy:

After conducting financial analysis, marketing managers must assess which objectives are not being
met and take corrective action needed

marketing strategies
● market segmentation, product/service differentiation and positioning

Market segmentation

By focusing its efforts on one or more segments, a business can better understand the needs of its
market → more competitive
Markets can be segmented according to:

Goods/service differentiation and position

- Business distiubioshees features of its products against competitors to persuade customers

their brand is more superior
- May be focused on price, higher quality, more environmentally friendly or customer service
(pre-sale and after-sales)
- Positioning refers to the development of a products image in the mind of a consumer
relative to others in the market
- Often based on price, quality or benefits eg. brad names such as Rolex evoke an image of
their products quality
 marketing strategies
● products – goods and/or services

Refers to the goods or services offered in exchange for the purpose of satisfying a need or want
They offer consumers tangible and intangible benefits
- Tangible - physical attributes such as design, colour and features
- Intangible - prestige, image associated with product, after sales service such a warranty

Branding

Reputation that a business or product developed over a period of time

- Brand names and logos provide messages of quality/value/prestige → consumer forms
judgements
- Strong brand name provides reassurance and customer loyalty

Types of branding
● Maniufactorer (owned by manufacturer, wellknown eg. sunbeam)
● Private (owned by retailer or wholesaler eg. Myer owns miss shop)
● Generic (no name, aimed at low budget buyers eg. Woolworths select)

Packaging
Refers to the way a product is physically presented to customers
- Often the first image of a product consumers sees → must give positive impression to
encourage first-time customers
- Must protect and maintain quality of product, atrtract attention of target market,
communicate brand identity and communicate to the consumer

marketing strategies
● price including pricing methods – cost, market, competition-based

Price charged msut reflect position and branding of the business within the marketplace. The three

Key pricing methods are:

Cost-based
Cost to plus a profit markup
Limitation: ignores the state of the market or market demand and difficult to find an appropriate
percentage markup (may be too low or overpriced)

Market-based
Set according to demand and supply fot he market
When demand for products is greater than its supply in the market, the price of the good will be
forced up

Competition based
Business observes competitior’s prices and sets their own accordinly
May chose to set above (convey more superior image) or below (to break into the market) or equal
to
Pricing strategies

Skimming
- Business sets relatively high price then lowers it over time
- Occurs in beginning of product lifecycle when quick profits are needed

Penetration
- Business charges lowest price possible to achieve a large market share, usually in a highly
competitive market
Loss leaders
- Product sold at or below its cost price to attract customers to the shop so they can buy more
products
- Often used when business wants to gain newcustomers, built a reputation of having low
prices, is overstrocked or has a slow selling product
Price points
- Certain price levels set for products with relatively constant demand
- Eg. clothing labl may set shirts at the price points $55, $75 and $95 regardless of their
production costs

Price and quality interaction

- Customers often associate quality of a product within its price (high price = superior quality)
- Prestige or premium pricing strategy where high price is charged to give aura of quality and
status

marketing strategies
● Promotion

Elements of the promotion mix:

● Advertising
- Form of paid, non-personal communication intended to persuade audience to
purchase a product
- Can be conducted through several mediums such as TV, radio, internet, magazines,
billboards
- When considering whcih medium to use, businesses must consider type of product
and its positioning, where the prodiuct is on the product on the product lifecycle, its
target market, the marketing budget and the cost the medium

● Personal selling and relationship marketing

- Involves personal interaction between salesperson and customer where the
saleslerpson attempts to persuade customer through their depth of knowledge and
personal hcaracteristics
- Key to establishing positive, long term relatiionshgip with customer to encourage
repeat sales (relationship marketing)

● Sales promotion
- Activities aiming to entice new customers, encourage trial purhcases of new
products and incrrease repeat purchashes from existing customers
 - Includes competitions, free gifts and loyalty card offers and point of purchase
displays

● Publicity and public relationships

- PR refers to planned efforts to present a business and its product in a positive light
- Can be done by working w/the media, sponsoring events or attention seeking
seeking gestures such as donations
- Publicity - any free news story about business and its product
- Aims to enhance image of a product, raise awareness of it and highlight a businesses
favourable featured

The Communications Process

Often customers are more willing to purchase a product if the business message is communicated via
a respected and trusted channel such as by world of mouth or an opinion leader
- Opinion leader: highly respected and influential individuals eg. mucisisnas, actors, athletes
- Word of mouth: people influencing each other in conversation, people tend to trust
someone they know more than advertisements

marketing strategies
● place/distribution

● Distribution Channels
Links point of manufacturing to the final customer → often involves intermediaries such as
wholesalers and retailers